In 2006 Frydenberg announced that he was seeking Liberal preselection for Kooyong, a comfortably safe Liberal seat in the eastern suburbs of Melbourne. The seat's incumbent member, Petro Georgiou, had held the seat since 1994. Kooyong is regarded as a Liberal "leadership seat." The three men who held it before Georgiou all went on to lead the Liberals or their predecessors--Andrew Peacock (leader of the Liberal Party 1983–85 and 1989–90), Sir Robert Menzies (founder of the Liberal Party and Prime Minister 1939–41 and 1949–66), and Sir John Latham (leader of the Nationalist Party, a direct ancestor of the Liberals, 1929–31).

The preselection was held at Trinity Grammar School on 23 April 2006.[5] Georgiou received 62 of the 85 delegates' votes, with Frydenberg receiving 22 votes and a third candidate, Alastair Armstrong, receiving one vote. After Frydenberg's defeat, federal Treasurer and deputy Liberal leader Peter Costello, who represented the nearby seat of Division of Higgins, encouraged him to run for pre-selection in Chisholm, a marginal electorate neighbouring Kooyong, held by Anna Burke of the ALP. It had previously been held by one of Frydenberg's mentors, Michael Wooldridge. Frydenberg declined the offer, saying, "This is where I am from, this is where I feel most comfortable and this is where I think there is real work to be done."[6] After Georgiou had announced his intention to retire at the next election, Frydenberg won preselection to contest the seat of Kooyong after beating industrial lawyer John Pesutto at the Melbourne Convention Centre on 20 June 2009.[7] Frydenberg's candidacy was supported by references from former Prime Minister John Howard and former Opposition Leader Andrew Peacock.[8]

In his maiden speech, he recounted the story of his Jewish grandparents' and great-aunt's migration to Australia from Nazi-controlled Europe and lauded the contribution of migrants to communities within his electorate. He enunciated his belief in small government, called for stronger ties with Asia while also maintaining a solid alliance with the US and proposed a target of having two Australian universities within the world's top ten by 2030.[10]

At the 2013 federal election, Frydenberg was re-elected with the largest swing to the Liberal Party in the seat since 1975. He was sworn in as a Parliamentary Secretary to the Prime Minister on 18 September 2013, with particular responsibility for the government's deregulation agenda. On 23 December 2014, Frydenberg was sworn in as Assistant Treasurer in a ministerial reshuffle and replaced Arthur Sinodinos, who resigned due to delays in an ICAC inquiry.[11][12]

In 2015, he declared that he had switched positions regarding same-sex marriage and publicly supported marriage equality.[13] In June he was the subject of an anti-Semitic smear from a Brisbane wealth adviser on Twitter which attracted wide media coverage.[14]